Ed Balls has denied taking part in a conspiracy to unseat Tony Blair following the 2005 general election

Ed Balls has denied taking part in a conspiracy to unseat Tony Blair following the 2005 general election, after a leaked series of papers showed the role he played in an operation to prepare Gordon Brown for the party leadership.

Balls said there was nothing in the papers, leaked to the Daily Telegraph, that amounted to a plot. The leak, which appears designed to damage the shadow chancellor, has already reopened bitter party wounds.

The documents show that Balls was the key figure in "Project Volvo", designed to unseat Tony Blair and prepare Gordon Brown for the Labour party premiership.

In an extraordinary development, Balls said he last saw the documents in a file on his desk in the education department a year ago when he was schools secretary.

He contacted David Bell, permanent secretary at the education department, to say that the papers were not among correspondence sent to his Commons office after the election, by which time Balls had stood down. Bell ordered an inquiry after consulting the cabinet secretary, Sir Gus O'Donnell.

The investigation will look into whether the current government was involved in the leaking of the papers, or whether a disgruntled former member of the Brown circle has decided to strike at Balls. The shadow chancellor is rapidly emerging as a key figure in the Labour party at a time when the leader, Ed Miliband, is struggling to assert his authority.

Speaking to reporters outside his home, Balls said: "There is nothing here to justify claims of a plot."

One key document among a raft of internal papers to be published by the Daily Telegraph over the coming days shows that a meeting to discuss Brown's leadership bid was held on 19 July 2005, a few months after Blair led the party to its historic third successive election win.

The document, which is annotated by Balls, talks of a "GB Transition Storyline" under the heading "Leadership Election". It says the key people in the process would be Balls, Ed Miliband, the pollster Deborah Mattinson and Spencer Livermore, a former Brown aide. Next to a finance section Balls has written in the figure £5m.

Labour sources played down the significance of the leak, depicting it as "ancient history". Other sources said that it was hardly surprising to discover that the Brown camp was making preparations for the post-Blair era after he made clear that the 2005 election would be his last as Labour leader.

But the leaked papers provide documentary proof that Balls was the key figure in a highly organised operation to unseat a sitting prime minister.

Brown sent Balls and other members of the group a series of memos in the autumn of 2005 highlighting Blair's weaknesses. "This is a government not presidency," he wrote. "Restoration of constitution and of trust. Leadership that gets on with the job … Trust depends on proper relationship between executive legislature and civil service, Labour the champion of the constitution … Need to redefine politics from spin/calculation/manoeuvre … No presidentialism." In one passage, Brown wrote to Balls: "If we are to renew Labour, we will have to be as rigorous and brutal as we were in the creation of new Labour."

In another memo, Brown showed his frustration with Blair, who refused to give a clear date for the handover of power. "Politics is about shaping the debate as much as winning the debate itself … Recent weeks have shown how far we have moved backwards since the election … The press now write as if Blair is the only person who could ever win Labour any election.

"From untrustworthy Blair v trustworthy Brown it is now reforming Blair v block-on-reform Brown. All his talk of Labour dominating the political landscape from the centre ground is not about re-establishing Labour but a self-promotion about his exceptionalism (and it is not rooted in what is actually happening).

"The facts are: two-thirds think Britain is moving in the wrong direction. More than half think we lied over Iraq. Trust in politicians is half what it was 20 years ago."

The documents also provide a lighter insight into the Brown operation. Mattinson, the group's pollster, dubbed the campaign to prepare him for the premiership "Project Volvo". A 31-page document produced to "develop a narrative" for Gordon Brown's vision compared him to the Swedish car make on the grounds that he was steadfast and robust. David Cameron, then recently elected Tory leader, was seen by voters as a more of a BMW.

Brown's team were advised to "demonstrate wider interests" focusing on his family, leisure and lifestyle. "Show humour, character, charm," the document said. "More Richard and Judy opportunities; use Richard and Judy mode at all times."